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September 11, 2023

Worcester eyes decertification of Unum’s tax break on downtown building

A modern office building with a sign that reads UNUM Photo | CHRISTINE PETERSON Health insurer Unum has vacated the Unum Building, even though it holds the lease. The tower has since been rebranded as One Mercantile.

The Worcester City Council may soon move to decertify a portion of the property tax break given to The Unum Group, as the Tennessee-based insurer has failed to meet its job retention and creation requirements on the downtown office building it formerly occupied.

If approved by both the city and state governments, the decertification would be a departure from the City of Worcester’s stance on property tax breaks for businesses, which have typically remained in place even when the companies didn’t meet the requirements outlined in the agreements.

Worcester Chief Development Officer Peter Dunn has recommended for the Worcester City Council to approve the decertification of a tax increment financing plan awarded to Unum in 2009 as an incentive to relocate and retain 600 jobs at a new development on Mercantile Street. At the time it was built, the development was known as The Unum Building, although it has since been rebranded as One Mercantile.

Dunn’s recommendation comes three years after Unum, a Tennessee-based insurance company, announced in July 2020 it would close its Worcester office in favor of a work-from-home strategy. There were approximately 400 employees working in the building at the time. Since that announcement Unum has been subleasing space in the building to an assortment of businesses including Xceedance, Timberline Construction, and the Greater Worcester Community Foundation. The building has been rebranded as One Mercantile.

The most recent report for the period ending on June 30, showed that the company employs 331 Massachusetts employees, of which 65 are Worcester residents.

“The intent of the TIF plan for 1 Mercantile Street, in addition to kickstarting the private investment in CitySquare, was to benefit Unum Group as an occupant of the building, and a local employer with efforts to retain, create, and locate jobs at a strategic property,” Dunn said in a letter to the city council. “Unum’s remote work structure no longer provides the significant economic spin-off effects that can be expected from 600+ jobs located within the core of the commercial downtown.”

Unum responded on Monday with the following statement:

"Unum has been a proud member of the Worcester community for a long time and plans to continue our role as a leader in the community. We believe we are in compliance with the agreement and hope to engage in a productive discussion with the city and relevant State agencies to resolve the matter."

If the TIF is decertified, then Unum will need to pay its full property tax liability going forward for the five remaining years on the deal. The property was assessed by the City of Worcester at $25.4 million for fiscal 2023 and the commercial tax rate is currently $31.26 per thousand dollars.

The decertification is on the agenda for the Tuesday meeting of the Worcester City Council. If approved, the matter would be sent to the Massachusetts Office of Business Development and Economic Assistance Coordinating Council for review and approval of the decertification.

Correction: A previous version of the article stated that Unum received a $1.4 million tax break. The $1.4 million is what Unum was scheduled to pay over 15 years. The savings would be the what the company would pay in taxes without the break over 15 years, less the $1.4 million.

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